Secondary Sources: Credit-Card Debt, Fed Language, Mankiw

–Credit-Card Debt:Meta Brown, Andrew Haughwout, Donghoon Lee and Wilbert van der Klaauw of the New York Fed say that borrowers under-report credit-card debt. “Household surveys are the source of some of the most widely studied data on consumer balance sheets, with the Survey of Consumer Finances (SCF) generally cited as the leading source of wealth data for the United States. At the same time, recent research questions survey respondents’ propensity and ability to report debt characteristics accurately. We compare household debt as reported by borrowers to the SCF with household debt as reported by lenders to Equifax using the new FRBNY Consumer Credit Panel (CCP). Moments of the borrower and lender debt distributions are compared by year, age of household head, household size, and region of the country, in total and across five standard debt categories. The debt reports are strikingly similar, with one noteworthy exception: the aggregate credit card debt implied by SCF borrowers’ reports is less than 50 percent of the aggregate credit card debt implied by CCP lenders’ reports. Adjustments for sample representativeness and for small business and convenience uses of credit cards raise SCF credit card debt to somewhere between 52 and 66 percent of the CCP figure. Despite the credit card debt mismatch, bankruptcy history is reported comparably in the borrower and lender sources, indicating that not all stigmatized consumer behaviors are underreported.”

–Fed Language:Olivier Coibion and Yuriy Gorodnichenko examine the Fed’s expectation to keep rates low through mid-2013. “The August 2011 meeting of the Federal Reserve’s Federal Open Market Committee produced new language describing the expected path of interest rates over a two-year horizon. That language spurred a variety of interpretations, as some saw it as describing what was already expected and others interpreted it as a significant policy shift. This column examines the expected path of future interest rates and says that the new language was wholly consistent with past Fed practice.”

–Mankiw:Sara Murray reports on a speech by Romney adviser Greg Mankiw. “Perhaps there’s a reason Harvard economist Gregory Mankiw, an adviser to Mitt Romney, started out a speech Thursday night by pointing out that he and the former Massachusetts governor don’t always agree. Speaking at Princeton University, Mr. Mankiw, former chairman of the Council of Economic Advisers under President George W. Bush, made the case for a consumption tax, offered support for the Federal Reserve’s stimulative experiments and noted that the popular mortgage-interest tax deduction isn’t sound policy.”

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